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Recent Challenges for Enforcement of Intellectual Property Rights

April 2006

Intellectual property (IP) rights exist to protect the works of creators and innovators from
misappropriation or copying by unauthorized parties. Such protection is in the interests not only
of the individual creators, but of wider economic development and consumer interests.
Counterfeiting and piracy hamper the growth of national economies, depriving legitimate enterprises
of turnover, and the state of revenues. The phenomenon deters investment and innovation,and often
violates employment, health and safety legislation. On a transnational scale, counterfeiting often
involves and sustains organized crime.

Changing patterns of counterfeiting and piracy

Today counterfeiting and piracy affect a huge spectrum of different goods, from aircraft parts
to detergent, from alcohol and perfumes to security holograms. No industry is spared. Whereas
previously high-end branded goods were a principal target, the latest trend is also to copy
ordinary branded consumer goods – even those as mundane as toothbrushes. The type of goods
counterfeited is changing constantly in line with market trends.

Counterfeiters are getting cleverer. They are exploiting technological advances to produce
copies hardly distinguishable form the originals, in some cases even outsmarting the proprietors.
They are making extensive use of the Internet, resulting in the sale and distribution of fake goods
at enormous speed and with no geographical limitations. And they are seeking to circumvent border
measures by moving imitation goods across borders in "disassembled" form, i.e. waiting until the
consignment has passed through customs before sticking on the trademark labels which would make it
obvious that the goods are counterfeit.

The problem is escalating, as demonstrated by the ever greater quantities and types of
counterfeit goods seized each year. In 2004, seizures of fake foodstuffs and alcoholic beverages
doubled at the European Union external borders, while seizures of computer hardware increased
nine-fold over the previous year (see table). The scale and nature of the problem demands a
coordinated approach to enforcement measures at the national, regional and international
levels.

European Union - Counterfeit Seizures (comparison 2003-2004)

Percentile increase in number of articles seized

Computer equipment (hardware) 899%

Electrical equipment 707%

Foodstuffs, alcoholic and other drinks 197%

Clothing and accessories 102%

Toys and games 47%

Perfumes and cosmeticis -22%

Watches and jewellery –27%

Audio CDs, games, software, DVDs, etc -43%

__________________________________________
Percentile increase in number of articles seized.

Calculating the Cost: OMO

OMO is a detergent, sold and distributed by Unilever. In 2004, a counterfeit version came on the
market for a few months in Mozambique. The counterfeit product, AMO, imitated the OMO graphics,
carried Unilever’s Mozambique address on its label, and sold in identical one kilogram packs.

During the short period that the counterfeit was on the market, OMO sales declined to 40 percent
of its normal monthly rate – a loss not only for Unilever, but more importantly for Mozambique, one
of the least developed countries. The 60 percent drop in sales meant an estimated total revenue
loss to the state of US$ 588,000 in value added tax, import duty and corporate tax that were not
paid by the counterfeiters.
Source: Unilever

WIPO’s role

Working jointly with Member States, industry representatives and other stakeholders, WIPO aims
to assist governments and industry in developing effective anti-counterfeiting and piracy
strategies. The focus is on awareness-raising, legislative assistance, improved coordination,
improving information exchange between right holders and enforcement agencies, and capacity
building.

These priorities are pursued on an international level through WIPO’s on-going cooperation with
organizations such as World Customs Organizations (WCO), Interpol, World Health Organisation (WHO)
and, in an observer capacity, in the Group of G-8. WIPO’s intensive cooperation with WCO, Interpol
and NGOs in the framework of the Global Congress Steering Group led to the high-level Global
Congress on Combating Counterfeiting and Piracy in Brussels in 2004 and Lyon in 2005 (see the
January/February 2006 edition of WIPO Magazine), as well as regionally focused conferences in Rome,
Shanghai and Rio de Janeiro. Two more regional forums will be held this year in Romania and in the
Gulf States prior to the third Global Congress, which will be hosted by WIPO in Geneva in January
2007.

"
Counterfeiting medicines…is a vile and serious criminal offence that puts human lives at risk
and undermines the credibility of health systems … Because of its direct impact on health…[it]
should be combated and punished accordingly." -These words are from the Rome Declaration,
issued by the World Health Organization (WHO) International Conference on "Combating Counterfeit
Drugs: Building Effective International Collaboration," which took place on February 18.

WIPO participated in the Conference and welcomed the declaration, which recognizes the need for
the "coordinated effort of all the different public and private stakeholders that are affected and
are competent for addressing the different aspects of the problem." It concludes that the WHO
should establish an International Medical Products Anti-Counterfeiting Taskforce (IMPACT) of
governmental, non-governmental and international institutions aimed at:

"raising awareness among international organizations and other stakeholders at the
international level in order to improve cooperation in combating counterfeit medicines, taking into
account its global dimensions;

raising awareness among national authorities and decision-makers and calling for effective
legislative measures in order to combat counterfeit medicines;

developing technical and administrative tools to support the establishment or strengthening of
international, regional and national strategies; and

encouraging coordination among different anti-counterfeiting initiatives."

Training

Training for law enforcement agencies are a key part of the work under taken by WIPO. Such
training programs bring together the different government agencies, as well as judges and
magistrates, so that all involved can better understand the work done by their counterparts and the
need for inter-agency cooperation. Cooperation with the private sector is a cornerstone of the
success of much of this training.

Training sessions typically include a review of international obligations
vis-a-vis provisions in the local laws; and discussion of the importance of deterrent
criminal penalties and destruction orders, as well as of adequate damage awards in favor of the
prejudiced right holders. Workshops for judges then typically focus on the analysis of IP case law,
both from within the country and from other countries. Workshops for prosecutors focus on how to
draft charges, to present evidence and to request the court to hand down deterrent sentences,
including orders to destroy the counterfeit goods and the implements used in their creation.
Training for police investigators aims to provide a clear understanding of the elements requiring
proof, in order to increase the chances of successful prosecutions. Customs officials benefit from
in-depth training sessions on how to spot those shipments more likely to contain counterfeit goods;
as well as how to identify such goods and to secure the cooperation of the right holder in the
subsequent border enforcement process.

Advisory Committee on Enforcement

WIPO Member States will shortly be meeting in the Advisory Committee on Enforcement (ACE), the
third session of which will be held from May 15 to 17 at WIPO headquarters. The main objectives of
the ACE are to enhance information exchange between law enforcement agencies, to assess training
and education needs, and develop teaching materials and methodologies, with a view to contributing
to the creation of a legal, organizational and technical framework for effective enforcement of IP
rights. The forthcoming session will focus on the theme of education and awareness-raising,
including presentations by a number of delegations detailing current efforts in this field.

Through all its activities, WIPO will continue, on request from Member States, to offer advice,
training and facilitation in order to assist those Member States in their efforts to render the
enforcement chain more effective, to improve the handling of IP disputes, to set up appropriate
anti-counterfeiting mechanisms and to strengthen essential partnerships between the public and
private sectors.

Operation Jupiter, South America

Interpol’s first Operation Jupiter ran from November 2004 to April 2005 with the participation
of the Argentinean, Brazilian and Paraguayan national police forces, Brazilian customs, and
representatives from pharmaceutical, recording, motion picture and tobacco cross-industry bodies.
This was the first time that four different industry sectors had joined with representatives of
federal police and customs agencies from the three countries to combat IP crime. The results were
impressive, and there were immediate benefits for participating industry sectors, including the
identification of common efficiencies, crime prevention measures, investigation methodologies and
good practices.

In Brazil, customs authorities made 36 seizures – for a total estimated value of US$3.5
million – and detained 79 suspects for smuggling and counterfeiting offences. On the border with
Paraguay, Brazilian customs seized 2.24 million blank CDs, an increase of 80 percent from previous
levels. The Federal Highway Police also routinely seized buses and truck loads of blank CDs and
DVDs in the border area destined to be used for the piracy of optical disks. In Paraguay, there
were seizures of some 8,700 cartons containing over 87 million counterfeit cigarettes.

The success of the operations depended on close cooperation between the law enforcement agencies
at national and transnational level; as well as on the willingness of the participating industries
to engage in the frank exchange of information with their counterparts in other industry sectors
for the common good. The results of the first Operation Jupiter have encouraged a number of other
countries to request the launch of similar operations on their borders. A second Operation is
planned to begin in 2006.

The WIPO Magazine is intended to help broaden public understanding of intellectual property and of WIPO’s work, and is not an official document of WIPO. The designations employed and the presentation of material throughout this publication do not imply the expression of any opinion whatsoever on the part of WIPO concerning the legal status of any country, territory or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. This publication is not intended to reflect the views of the Member States or the WIPO Secretariat. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by WIPO in preference to others of a similar nature that are not mentioned.